The HWS company was recently formed to manufacture a new product. with the following capital structure:

9% debentures of 2002 ($1000 Par) $6,000,000

7% Preferred stock ($100 Par) $2,000,000

Common Stock (320,000 shs.) $8,000,000

total $16,000,000

The company is expected to pay a $2 dividend next year. The dividend growth rate is 10%, the require rate of return on equity funds is 12%, and their common stock is presently selling for $50 per share. Assume a marginal tax rate of 40%. a) Compute the weighted average cost of capital.